Finding a home you love can be difficult when inventory is limited. But a failed home purchase could create an opportunity for the next buyer.
U.S. home-purchase contract cancellations hit a record high in July, according to a Redfin report. Home-sale cancellations hit 14%, the highest percentage in almost three years (since November 2023).
This may sound like bad news for buyers. Something must be wrong for so many people to back out of their home-buying contracts, right?
But in many ways, the home-sale cancellations surge helps homebuyers.
“Buyers know they have options right now, so they’re pushing harder in negotiations,” Redfin Premier agent Juan Castro said in the report. “That can be tough for sellers, but it’s good news for buyers.”
Home-purchase cancellations give the next buyer more power
In many local markets, buyers have more leverage than they did during the pandemic-era housing boom. When homebuyers have more choices, they have the upper hand in real-estate transactions.
Each time something goes wrong for a seller, they might lose a little more power. For example, a buyer will know the seller is getting more desperate if the online listing shows that the house has been on the market for a long time, or the seller has reduced the price.
And a home-sale cancellation is another wrench in a seller’s plans.
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“A home that comes back on the market may face less competition, and the seller may be more motivated to reach an agreement the second time around,” Redfin writes.
The seller may be more motivated to get the deal done the second time around, particularly if the failed transaction created financial or timing pressures.
If you’re the next buyer, this gives you room to negotiate.
Home-sale cancellations hit their highest point in almost three years, reported Redfin.
Negotiation options in today’s housing market
A homebuyer can negotiate for a lower price in a buyer’s market, but that’s not the only card you can play. Depending on your priorities, there are several terms to consider negotiating.
If affordability is an issue, then yes, asking for a lower price is a good choice. Especially if comparable sales in the neighborhood are lower than the current listing price or if the home appraisal comes back lower than expected.
You could also negotiate for the seller to cover some of your closing fees. If you’re stuck with a high mortgage rate, inquire about the seller paying for some or all of a mortgage-rate buydown.
Related: Experts predict mortgage rate, housing market shift
The previous buyer may have canceled their purchase after the home inspection revealed problems with the house. You could negotiate with the seller to give you a lump sum to use toward the repairs.
Do you have a strict timeline for moving in? Consider negotiating for either a faster or extended closing date.
Negotiations can be your real estate agent’s time to shine. They act as a go-between for buyers and sellers and can give you tips on what to ask for, depending on your situation and the local market.
How to find out if a home has undergone cancellation
If you’re perusing houses for sale, you’re probably using websites such as Redfin and Zillow. As a homebuyer, you cannot see home-purchase cancellations specifically on these sites. You can access a listing’s status change, though.
With a status change, you’ll see if a home switched from “active” to “pending” or “under contract.” You can also see if it goes back to “active” or “back on the market.”
You can’t see why the listing status changed or whether the buyer canceled the contract, but the status history does give you some insights. “Back on the market” is a strong clue, but not proof that the previous buyer canceled.
These websites also show various data on price history, including whether the price has recently dropped.
Once again, this is a good time to rely on your Realtor. Ask them to check the local Multiple Listing Service (MLS) for more information about whether there has been a home-purchase cancellation.
This knowledge will equip you with the tools you need to make an offer, negotiate, and close on a home.
A canceled purchase doesn’t necessarily mean something is wrong with the house. For the next buyer, it can mean an opportunity to negotiate.